Anything where lots of untracked money goes in is a suitable business, better yet if the actual work of the front company can be hidden away.
A good example is the Breaking Bad series (if you haven't seen it, do so :-D ), where the main character, Walther, uses a car wash as a money launder for the money he earned on his & his partner's methamphetamine sales.
A Car wash is potentially a good front, as you can easily pad a few extra customers on the monthly reports. Nobody (not even the IRS) can prove or disprove (without constant supervision of the front business) that laundering is taking place...
Now, in any case, you'll need clean money to start the business (eg. a bank loan, or any clean income source.), and you'll need the following:
- A person to run the business day to day
- A number of people to come in with dirty cash
- A way (or a number of ways) to have the dirty cash flow into the register (eg. useless car paraphernalia, fake antiques) and possibly a way to recycle these wares.
- To attrach REAL customers (the more the better, in order to hide your own "customers")
- A location where REAL customers will visit (Opening a massively successful carwash in Bumfuck, Indiana (population: 3) will most probably turn on a light at some of the Acronymic Agencies out there)
- A Scapegoat (Your Plan B)
We'll use Walther White's car wash as the first example:
1. I want to be able to scale the business up and down to fit cash-flow
Most businesses, including before mentiontioned car wash can scale up or down... In this case, you can open other departments elsewhere. This is relatively easy with, say a car wash or a pawn shop... You can upscale or downscale your work force or warehouse as you go along.
With a casino, this is more difficult, not only do these places have A LOT of overhead (security, teller and dealer pay, not to mention power and operatin costs), but you cannot scale the business in the same way (you always need security, tellers and dealers for the business to run)
However, there's no way to do this quickly without waking suspicion... crooked or not, a business needs to be handled with care if it's to be successful.
2. obviously I want to not waste too much in overheads (this is a lower
priority), but it is critical that
Again, this is a matter of common sense. At best, you need to have your business going well, or need to get there quickly.
One way is to invest in a business that is already going strongly, but here you'd have to aim for complete ownership.
A popular way is to buy up assets and warehouse stock from businesses that have filed for bankruptcy (which can be done quite cheaply), and opening something new from that.
A third way is to "buy" permission to use an existing operation from another crook, however unsafe this may be.
Walther's car wash employs only his wife (Skyler) and a few guys for customer service. Most supplies are bought bulk and are relatively cheap (car soap, water, car paraphernalia)
3. if the authorities start to ask where the money ultimately comes
from, the question can be plausibly answered or else be innocently
Any business where most people use cash for their transactions, you can get away with "most our customers use cash". Cash CAN be tracked (provided coins/notes have serial numbers), but you CANNOT track everybody along the chain like you can with account transactions or credit cards.
As long as you process the cash normally (write it down as customer sales, and go to the bank with it as normal (ie. NOT suddenly depositing $500 grand for your little shop) and filing it properly with the IRS), the IRS & co. cannot prove or disprove where the money came from...
In your case (millions of dollars a year), your bunch of criminals would most likely have a small "network" of assorted money-laundering businesses. A variety of different businesses makes the system stronger; not only can they help with masking the illegal money traffic by conducting normal trade, the system will also be less susceptible for being shut down (like a chain of casinos or car washes).
A varied portfolio of front businesses (especially when owned by different people) also gives your organization the possibility of using the locations for criminal purposes (say, for cooking meth), and another trump card for others in the network ("I didn't know")
(ps. not meant as an education in money laundering, only giving OP some options to work with)